Microsoft surrenders OpenAI board position amid regulatory scrutiny

SAN FRANCISCO – Microsoft has given up its seat on OpenAI’s board, relinquishing a non-voting position it gained in late 2023, as regulators intensify their scrutiny of the ties between the tech giant and the artificial intelligence (AI) start-up behind ChatGPT.

Microsoft told OpenAI of its decision in a letter delivered on July 9. It will remain the largest investor in OpenAI, with a 49 per cent stake.

Microsoft has committed to invest US$13 billion (S$17.5 billion) in the company that developed ChatGPT, which has become the world’s most popular chatbot because of its ability to answer questions, create images and write software code.

This week, OpenAI told key investors and business partners that it would begin meeting with them on a quarterly basis, an OpenAI spokesperson said. These meetings will be open to investors, including Microsoft and venture firms Khosla Ventures and Thrive Capital, as well as Apple, which recently struck a deal to make ChatGPT available on iPhones later in 2024.

Microsoft joined OpenAI’s board in late 2023 as a non-voting observer. It came weeks after OpenAI’s board fired and then reinstated Mr Sam Altman as OpenAI’s chief executive. In the wake of that upheaval, OpenAI remade its board, bringing on four new directors.

In the letter to OpenAI, Microsoft corporate secretary Keith Dolliver said the company had decided that its role on the board was unnecessary because it had “witnessed significant progress from the newly formed board and is confident in the company’s direction”.

Microsoft’s decision coincides with European and US regulators’ examination of its ties to OpenAI. In March, Europe’s antitrust enforcer, the European Commission, sent questions to Microsoft, Google, Meta and others about their investments in AI start-ups. It has since sent follow-up questions to Microsoft about its investment in OpenAI because it is concerned about how dominant companies could block smaller competitors from gaining access to AI technology.

In the United States, the Federal Trade Commission is embarking on an investigation into the Microsoft and OpenAI partnership, which has raised questions about whether it was structured to allow Microsoft to avoid a regulatory review.

Over the years, Microsoft has sought to avoid confrontation and instead has compromised with regulators. It managed to close a US$69 billion acquisition of Activision Blizzard, the video game publisher, in the more muscular regulatory environment by agreeing to offer games on rival consoles and license current and future games to a rival publisher. NYTIMES